USA: Trump executed an unprecedented deal for a president in business

diciembre 1, 2016

Periodista: María Alejandra Lopez🕔01.Dic 2016

President-elect Donald Trump has found partial success in his promise to keep the air conditioning manufacturer Carrier from moving jobs from Indiana to Mexico. However, questions remain about the president-elect’s negotiations.

Carrier tweeted on Tuesday that the manufacturer had reached a deal with Trump and Vice President-elect Mike Pence that would “keep close to 1,000 jobs” in Indianapolis.

The company had planned to outsource roughly 2,100 jobs to Mexico with the closure of a plant in in Indianapolis, which employs 1,400 people, and another in Huntington, Indiana, which employs 700. The fate of the Huntington plant is still unclear.

While it isn’t uncommon for local politicians and state governors to negotiate with individual companies to prevent the relocation of jobs, it is much less common for a president to do so. However, according to John McGinnis, a professor of constitutional law at Northwestern, just because it’s uncommon doesn’t make it illegal or unconstitutional.

“The president can try his absolute ability to persuade companies to do what he would like,” short of threatening to jail or strip property from executives who refuse, McGinnis told Business Insider. “If [the president] is going to take some administrative policy [or] introduce some regulation in Congress … I don’t think that generally is a problem. Whether it’s wise or not is another question.”

While politicians trying to convince companies to bend to their will isn’t necessarily “extraordinary” behavior, McGinnis said it is also uncommon for extensive negotiations to take place before the president-elect takes office.

As Trump is not yet president — and as it would be impossible for the president alone to pass an aggressive tax on outsourcing without congressional support — Trump’s tactics in convincing Carrier’s parent company, United Technologies Corp., to keep half of those jobs in the US remain unclear.

Trump followed Carrier’s tweet with one of his own on Tuesday, saying he would make a major announcement in Indiana on Thursday about Carrier staying in Indianapolis.

TJ Bray, a Carrier worker who serves as a media representative for the manufacturer’s United Steelworkers Local 1999 union, told Business Insider that the union had confirmed that a deal had been made, but that it had not been informed of the details.

“We’d like to save all the jobs, but if it’s 1,000 at our [Indianapolis] facility … it’s successful in that most of the jobs are staying,” said Bray, who has worked at Carrier for 14 years. “We’re excited, and it seems like a victory for the little people.”

Bray said he was “blindsided” when the news broke on Twitter on Tuesday. While Bray said he was cautiously optimistic, he is also waiting to see what sacrifices had been made in the deal, especially since as recently as yesterday morning he hadn’t been very hopeful that Trump would succeed in keeping the factory open.

Reports indicate that the negotiation was a two-way street, with Trump providing benefits as opposed to relying solely on threats of higher taxes to intimidate the manufacturer. The Wall Street Journal reported that Pence, who is the governor of Indiana, took time in negotiations with Carrier to discuss Congress’ priorities that could be beneficial for the company, including a tax overhaul that could help reduce taxes on United Technologies’ overseas profits.

Trump also had certain leverage on United Technologies because of the company’s dependence on government contracts. United Technologies makes roughly $5.6 billion, or 10% of its annual sales, every year from military sales.

Carrier became a poster child throughout Trump’s campaign for problems facing American workers as manufacturing jobs leave the US.

“If I was in office, Carrier wouldn’t be leaving,” Trump said in a speech at the Indiana Fairgrounds in April. He said he would impose an aggressive tax on Carrier and other companies moving manufacturing jobs outside the US.

There are practical issues regarding a president negotiating with individual companies. While Carrier’s factories carried major symbolic weight for the president-elect, negotiating on a case-by-case basis with each company that threatens to outsource jobs would require a lot of time and effort — especially if each company expects Trump to sweeten the deal.

Trump may have found a solution for Carrier, but the administration will need to do more work if it wants to fix the underlying issues that would have allowed United Technologies to save $65 million by outsourcing jobs to Mexico.